Microeconomics
21st Edition
ISBN: 9781259915727
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Question
Chapter 9.8, Problem 1QQ
To determine
Short run average total cost .
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
A computer company produces affordable, easy-to-use home computer systems and has fixed costs of $250. The marginal cost of producing computers is $700 for the first computer, $250 for the second, $300 for the third, $350 for the fourth, $400 for the fifth, $450 for the sixth, and $500 for the seventh. Create a table that shows the company’s output, total cost, marginal cost, average cost, variable cost, and average variable cost. At what price is the zero-profit point? At what price is the shutdown point? If the company sells the computers for $500, is it making a profit or a loss? How big is the profit or loss? Sketch a graph with AC, MC, and AVC curves to illustrate
3. XYZ corporation produces widgets. Its short-run marginal cost curve is given by MC (q) =
10 – 5q + q² (this is a parabola whose minimum occurs at q = 2.5). XYZ's fixed costs are 10.
In a two panel diagrams, graph the following cost curves: (a) total cost, (b) total variable cost,
(c) total fixed cost, (d) marginal cost, (e) average variable cost, and (f) average total cost.
Your diagrams do not need to be scale, but must be internally consistent (i.e. the relationships
between different curves must be correct). You do not need to find mathematical expressions
for the other cost curves – you only need to sketch lines that are consistent with the shape of
the marginal cost curve.
2.10 The long-run average cost curve for an industry is repre-
sented in the following graph. Add short-run average cost
curves and short-run marginal cost curves for three firms in
this industry, with one firm producing an output of 10,000
units, one firm producing an output of 20,000, and one
firm producing an output of 30,000. Label these as Scale 1,
Scale 2, and Scale 3, respectively. What is likely to happen to
the scale of each of these three firms in the long run?
Cost per
unit ($)
LRAC
10,000
20,000
30,000
Units of
output
Chapter 9 Solutions
Microeconomics
Ch. 9.2 - Prob. 1QQCh. 9.2 - Prob. 2QQCh. 9.2 - Prob. 3QQCh. 9.2 - Prob. 4QQCh. 9.5 - Prob. 1QQCh. 9.5 - Prob. 2QQCh. 9.5 - Prob. 3QQCh. 9.5 - Prob. 4QQCh. 9.8 - Prob. 1QQCh. 9.8 - Prob. 2QQ
Ch. 9.8 - Prob. 3QQCh. 9.8 - Prob. 4QQCh. 9 - Prob. 1DQCh. 9 - Prob. 2DQCh. 9 - Prob. 3DQCh. 9 - Prob. 4DQCh. 9 - Prob. 5DQCh. 9 - Prob. 6DQCh. 9 - Prob. 7DQCh. 9 - Prob. 8DQCh. 9 - Prob. 1RQCh. 9 - Which of the following are short-run and which are...Ch. 9 - Prob. 3RQCh. 9 - Indicate how each of the following would shift the...Ch. 9 - Prob. 5RQCh. 9 - Prob. 6RQCh. 9 - Prob. 1PCh. 9 - Prob. 2PCh. 9 - Prob. 3PCh. 9 - Prob. 4P
Knowledge Booster
Similar questions
- Explain what is the relationship between marginal cost and average total costs for a firm or industry exhibiting each of the following: a. Economies of scale. b. Constant returns to scale. c. Diseconomies of scale.arrow_forwardThe Banana computer company produces affordable, easy-to-use home computer systems andhas fixed costs of $250. The marginal cost of producing computers is $700 for the first computer, $250 for the second, $300 for the third, $350 for the fourth, $400 for the fifth, $450 for the sixth, and $500 for the seventh. Create a table that shows the company's output, total cost, marginal cost,average cost, variable cost, and average variable cost. A At what price is the zero-profit point? Atwhat price is the shutdown point? B If the company sells the computers for $500, is it making a profitor a loss? How big is the profit or loss? Sketch a graph with AC, MC, and AVC curves to illustrate youranswer and show the profit or loss. C If the firm sells the computers for $300, is it making a profit or aloss? How big is the profit or loss? D Sketch a graph with AC, MC, and AVC curves to illustrate youranswer and show the profit or loss.arrow_forwardExhibit 9a.1: Costs for the Zonker Company Quantity (units per week) Total Cost Total Variable Cost (dollars per week) (dollars per week) 20 26 14 36 24 4 50 38 68 56 93 81 128 116 1. What are total fixed costs for the Zonker Company? a. SO b. $8 c. $12| d. $20 2. The marginal cost to the Zonker Company of producing the third unit of output is and the marginal cost of producing the sixth unit of output is $_ a. $10; $25 b. $36; $93 c. $24; $81 d. $25; $40 3. If the market price is $15 per unit and Zonker can sell all it wants at that price, then Zonker maximizes profit in the short run by producing a. 5 b. 3 units per week. C. 4 d. 0arrow_forward
- Fertilizer Q TFC TVC TC MC ATC AVC AFC TR MR 25 70 1300 100 8 150 10 55 220 3500 Notes: Fertilizer, Q, TFC, TVC, TC, MC, ATC, AVC and AFC refer to quantity of fertilizer (in units), quantity of output (in units), total fixed cost, total variable cost, total cost, marginal cost, average total cost, average variable cost and average fixed cost, respectively. Answer the following questions based on the Table completed: What is the marginal input cost? Answer Is the firm making a profit or loss? Is the firm operating in the long-run or in the short-run? Why?arrow_forward0 1 2 3 4 5 Problem 1. Fill out the missing data. Quantity Total Cost Marginal Cost Fixed Cost Variable Cost Average Total Cost - Average Variable Cost 7 10 37 22.5 10.50 15 The market price for the firm's output is $14.50. a) What quantity will the firm produce? Q = b) What is the firm's profit? Profit= P = P = c) What is the breakeven price? d) What is the shutdown price? f) Are consumers or producers affected by the tax more? Explain.arrow_forwardExplain how the Average Total Cost curve is derived for a competitive firm in the long-run. Also, explain what is economies of scale.arrow_forward
- The data in the table below are the monthly average variable costs (AVC), average total costs (ATC), and marginal costs (MC) for Alpacky, a typical alpaca wool-manufacturing firm in Peru. The alpaca wool industry is competitive. Output (units of wool) 0 1 2 3 4 5 6 AVC Market Price a. $22.00 b. $18.00 c. $16.00 20.00 17.00 16.70 17.00 18.00 22.33 ATC Qmax - 30.00 22.00 20.00 19.50 20.00 24.00 MC ($) For each market price given below, give the profit-maximizing output quantity and state whether Alpacky's profits are positive, negative, or zero. Also state whether Alpacky should produce or shut down in the short run. 20.00 14.00 16.00 18.00 22.00 44.00 Profit (Click to select) (Click to select) (Click to select) ✓ Produce in Short Run (Click to select) ✓ (Click to select) (Click to select) ✓arrow_forwardThe above cost curves are for a firm producing flour, which is measured in pounds. 1. What is the firm's total cost when it produces 200 pounds of flour? ______(Enter only a number) 2. What is the firm's fixed cost? _____(Enter only a number) 3. What is the firm's average variable cost when it produces 200 pounds of flour? _____(Enter only a number)arrow_forward7. An economist estimated that the cost function of a single product firm is given by C (Q) = 100 +25Q+40Q2+2Q3 Based on this information, determine the followings. a. The fixed cost of producing 8 units of output b. The variable cost of producing 8 units of output c. The total cost of producing 8 units of output d. The average fixed cost of producing 8 units of output e. The average variable cost of producing 8 units of output f. The average total cost of producing 8 units of output g. The marginal cost when Q=8arrow_forward
- At level of output, average fixed costs = $20, average variable costs = $10 and total costs= $900. Given this information, what is the quantity being producedarrow_forwardA computer company produces affordable, easy-touse home computer systems and has fixed costs of $250. The marginal cost of producing computers is $700 for the first computer, $250 for the second, $300 for the third, $350 for the fourth, $400 for the fifth, $450 for the sixth, and $500 for the seventh. a. Create a table that shows the company’s output, total cost, marginal cost, average cost, variable cost, and average variable cost. b. At what price is the zero-profit point? At what price is the shutdown point? c. If the company sells the computers for $500, is it making a profit or a loss? How big is the profit or loss? Sketch a graph with AC, MC, and AVC curves to illustrate your answer and show the profit or loss. d. If the firm sells the computers for $300, is it making a profit or a loss? How big is the profit or loss? Sketch a graph with AC, MC, and AVC curves to illustrate your answer and show the profit or loss.arrow_forwardFor cases, A through F in the following table, would you (1) operate or shut down in the short run and (2) expand your plant or exit the industry in the long run? A B C D E F Total revenue 1,000 2,500 4,000 7,500 7,500 7,500 Total cost 1,400 1,500 5,500 7,000 7,500 8,000 Total fixed cost 300 1,000 500 2,500 2,500 2,500arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Essentials of Economics (MindTap Course List)EconomicsISBN:9781337091992Author:N. Gregory MankiwPublisher:Cengage LearningManagerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage LearningPrinciples of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage Learning
- Exploring EconomicsEconomicsISBN:9781544336329Author:Robert L. SextonPublisher:SAGE Publications, Inc
Essentials of Economics (MindTap Course List)
Economics
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Exploring Economics
Economics
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:SAGE Publications, Inc